Fitch upgrades Crompton Greaves

Fitch Ratings said it upgraded the national issuer rating of India-based Crompton Greaves Ltd. to AA-(ind) from A+(ind). Fitch also affirmed the company's Rs. 1 billion short-term debt and commercial paper program at F1+(ind). The outlook is stable.

Fitch said the upgrade is driven primarily by Crompton Greaves's improvement in financial profile during fiscal year 2005 and the growth in profitability during the nine-month period ended Dec. 31, strong order backlog led by the growth from the end-consuming industries and reduced probability of support required for Pauwel Group on account of its return to profitability at the net level during the 12-month period ended Dec. 31.

Key concerns include the competitive environment in which the company operates and overcapacities in certain product segments, which Fitch said may lead to pressure on margins. The company also continues to remain exposed to challenges associated with deriving synergies from Pauwel Group.

Crompton Greaves's total debt to EBDIT improved to 1.55x in fiscal 2005 from 1.81x in fiscal 2004.

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